Financing Non Core Technology

It is not uncommon for R&D focused companies to come upon a novel idea that while potentially commercially interesting is outwith their own business interests or for a company to find such technologies amongst the assets of a business they take over. It makes sense to try and find a home for these technologies with businesses that can take them forward rather than see the asset wasted but often the technology concerned is at too early a stage to find a good home or to attract a good price.

One solution may be to utilise an Isle of Man Protected Cell Company. The assets can be placed in a Protected Cell and then marketed to see if there is investor interest independent of the original company. If there is the technology can be grown within the Protected Cell which can attract investment and enter into contracts much like a traditional company, or transferred easily into another vehicle. If there is no interest the Protected Cell can be easily closed down. Protected Cells can be set up and closed down by board resolution and require only very light administration. They are generally tax neutral for UK residents but the absence of local corporation or capital gains taxes may have attractions for foreign investors and larger corporate investors. Another attraction for some investors may be the lack of a public register of investors in the Protected Cell. For example a company may be interested in an early stage technology and wish to support its development financially but may not want their competitors to know of their interest in the area.

We have been working with Corlett Bolton, a well established law firm in the Isle of Man for the last year to introduce the potential for this type of structure to small IP rich organisations in the UK. Previously this type of structure was the preserve of major insurance companies but Corlett Bolton have developed the means to offer this same opportunity to the smaller company. There are of course many uses of this type of structure: another that may be attractive to companies that have risky assets or projects could be to use Protected Cells as a form of group structure with each type of activity or project in its own cell. As one cell cannot "infect" another cell if it gets into difficulty this may be a way of managing risk. Other states offer Protected Cell structures but the Isle of Man is particularly attractive due to its political and financial stability, membership of relevant international treaties and close ties to the UK and EU

If you would like to discuss how this type of structure might work for you we and our partners in the Isle of Man would be happy to talk to you in more detail.